Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold soared 3.3% to close at a two-month high above $1,314, then pushed as high as $1,322 in electronic trade after hours, as dovish remarks on monetary policy from Janet Yellen combined with escalating violence in Iraq to stoke appetite for bullion. Silver surged 4.4% for its biggest one-day gain in four months while platinum and palladium jumped 1.6% and 1.9%, respectively.

In a press conference following yesterday's FOMC meeting, Fed Chair Yellen surprised the markets by pledging monetary stimulus for as long as needed, emphasized that interest rates are likely to remain low for a long time after the Fed's taper of quantitative easing is completed.

Traders took her comments to be even more supportive of monetary easing than yesterday's official Fed policy statement, which had already lowered the ceiling for long-term rates and slashed growth forecasts for this year. Low interest rates support higher gold prices in part because they weaken the dollar and push investors toward alternative stores of value. The dollar fell to a four-week low against a basket of major rivals.

Gold received added safe-haven support after President Obama announced that he will send 300 U.S. military advisors to Iraq to help counter the insurgency of Sunni militants, who yesterday seized control of Iraq's biggest oil refinery. The deepening crisis is seen as a major threat to Middle East stability and oil production.

At the Comex close: August gold soared $41.40 to $1,314.10; July silver surged 87 cents; July platinum climbed $23.70 to $1,474.50; and September gained $15.95 to $838.60 an ounce.